Housing

Billions spent by bank of mum and dad show broken housing market

New figures reveal more than ever - £6.5 billion - will be spent by parents helping children get a foot on the property ladder this year

Many would-be first-time house buyers, like me, know how dispiritingly tough it is to save for a deposit. I imagine very few people would turn down a financial hand up, should one become available.

A new study reveals that the so-called Bank of Mum and Dad are on course to invest £6.5 billion helping their children get a foot on the UK property ladder this year – a large enough sum to be considered the nation’s ninth-largest lender.

The research from Legal & General (L&G) and economics consultancy Cebr estimates the amount exceeds the £5 billion shelled out by parents last year. The average amount made available for deposits has risen from over £17,000 last year to almost £22,000, while the average parental contribution in London is just under £30,000.

Around 2 in 5 homeowners in London (39%) receive some help from the Bank of Mum and Dad.

That so much money continues to be made available is a mark of how astonishingly well the baby boomer generation have done from Britain’s long property boom. It is also a reminder of how house prices have long soared past typical earnings, with young adults struggling to get anywhere near the sums required to match older people in the market.

It is a symptom of our broken housing market

Nigel Wilson, the chief executive of L&G, is convinced “intergenerational inequality” has become a major problem. “This is not a good thing, nor is it sustainable or equitable for our parents (the lenders) or young people (the borrowers),” he said.

“Younger people today don’t have the same opportunities that the baby-boomers had, including affordable housing, defined benefit pensions and free university education,” Wilson added. “Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market.”

Wilson repeated the familiar call to resolve the “supply-side crisis” by building more houses. But if house prices are now so wildly detached from what people are actually earning, perhaps more radical ideas and experiments will be required.

In next week’s edition of The Big Issue, we’re looking into the work of the London Community Land Trust, which has been able to establish a ground-breaking principle at their new development at St Clements in Bow: linking house sale prices with average local earnings.

Make sure you pick up your copy (Monday May 8) to find out more on how housing costs might be linked to wages.

Big Issue vendors are back!

It’s not just the shops that are opening again. From Monday 12th April onwards,  Big Issue vendors are back in business, with a big smile and a stack of magazines. Buy from your local vendor today!

Find out more

Support your local Big Issue vendor

If you can’t get to your local vendor every week, subscribing directly to them online is the best way to support your vendor. Your chosen vendor will receive 50% of the profit from each copy and the rest is invested back into our work to create opportunities for people affected by poverty.
Vendor martin Hawes

Recommended for you

View all
How can I help homeless people during a UK heatwave?
uk heatwave
Homelessness

How can I help homeless people during a UK heatwave?

Our right to housing is dependent on our immigration status – that's the definition of racism
Homelessness

Our right to housing is dependent on our immigration status – that's the definition of racism

Academics put trackers on homeless people – what they learned could be a 'game-changer'
A homeless person is interviewed on the streets of Sutton
Rough sleeping

Academics put trackers on homeless people – what they learned could be a 'game-changer'

Activist Kwajo Tweneboa: 'We're facing the biggest housing crisis since World War II'
Housing

Activist Kwajo Tweneboa: 'We're facing the biggest housing crisis since World War II'

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know

Support our vendors with a subscription

For each subscription to the magazine, we’ll provide a vendor with a reusable water bottle, making it easier for them to access cold water on hot days.